Question

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Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $310,000 of net income and the following selected transactions occurred in the order given:

a. Issued 110,000 shares of the common stock at $46 cash per share.

b. Reacquired 16,000 shares at $41 cash per share.

c. Reissued 5,500 shares from treasury for $42 per share.

d. Reissued 5,500 shares from treasury for $40 per share. 4.value: 2.00 pointsRequired information Required:

1. Indicate the account, amount, and direction of the effect on above transaction. (Enter any decreases to account balances with a minus sign.) eBook & Resources eBook: Explain and analyze common stock transactions. 5.value: 2.00 pointsRequired information

2. Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

3.	Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

1)
	Global marine
TR
	Assets		=	liabilities	+	Stockholders Equity
a)	Cash	5060000				Common stock			550000
						Addittional paid in capital			4510000
b)	Cash	-656000				Treasury stock			656,000
c)	Cash	231000				Treasury stock			225500
						Addittional paid in capital			5,500
d)	Cash	220000				Treasury stock			225500
						Addittional paid in capita			-5500
2)		Journal Entries
TR	Account titles & Explanations				Debit	Credit
a)	Cash	(110000*46)			5060000
	Common stock		(110000*5)			550000
	Addittional paid in capital					4510000
b)	Treasury stock				656000
	cash	(16000*41)				656,000
c)	Cash	(5500*42)			231000
	Treasury stock (5500*41)					225500
	Addittional paid in capital					5500
d)	Cash				220000
	Additional paid in capital				5,500
	Treasury stock		(5500*41)			225500
3)		Stockholders Equity
	Contributed capital
	Common stock					550000
	Addittional paid in capital -CS					4510000
	total contributed capital					5060000
	retained earnings					310,000
	Total.					5370000
	less treasury stock					-205,000
	stockholders Equity					5165000